Verra Mobility(US:VRRM)2019-08-06 20:24Revenue Growth - Service revenue increased from $166.1 million for the six months ended June 30, 2018, to $201.1 million for the same period in 2019, with acquisitions contributing $21.6 million and existing product expansion contributing $13.4 million[132]. - Service revenue increased by $35.1 million, or 21.1%, to $201.1 million for the six months ended June 30, 2019[167]. - Service revenue increased by $6.0 million, or 6.2%, to $103.1 million for the three months ended June 30, 2019, compared to $97.0 million for the same period in 2018, representing 94.1% of total revenue[151]. - Total revenue for the three months ended June 30, 2019, was $109.6 million, an increase of $11.4 million or 11.6% from $98.2 million in the same period of 2018[150]. - Total revenue for the six months ended June 30, 2019 was $208.0 million, a 24.2% increase from $167.4 million in the same period in 2018[165]. - Product sales surged by $5.4 million, from $1.2 million in Q2 2018 to $6.5 million in Q2 2019, driven primarily by a single customer expanding their school zone speed program[155]. - Product sales rose significantly by 397.8% to $6.9 million for the six months ended June 30, 2019, compared to $1.4 million in the same period in 2018[165]. Operating Expenses and Profitability - Operating expenses as a percentage of total revenue decreased from 31.3% in the six months ended June 30, 2018, to 29.4% in the same period in 2019, indicating improved cost structure[132]. - Operating expenses rose by $3.0 million, or 10.4%, from $28.8 million in Q2 2018 to $31.8 million in Q2 2019, while operating expenses as a percentage of revenue decreased slightly from 29.3% to 29.0%[157]. - Selling, general and administrative expenses decreased by $6.7 million to $20.9 million in Q2 2019, down from $27.6 million in Q2 2018, with a percentage of revenue decline from 28.1% to 19.0%[158]. - Income from operations surged to $35.6 million for the six months ended June 30, 2019, compared to $4.5 million in the same period in 2018, reflecting a 687.5% increase[165]. - The company reported a net income of $3.6 million for the three months ended June 30, 2019, compared to a net loss of $4.8 million in the same period in 2018, marking a turnaround of $8.4 million[150]. - Net income improved to $3.6 million for the three months ended June 30, 2019, compared to a net loss of $4.8 million for the same period in 2018[162]. - Net income for the six months ended June 30, 2019, was $6.4 million, compared to a net loss of $26.9 million for the same period in 2018[214]. - Adjusted EBITDA increased by $5.1 million, or 9.3%, from $54.6 million in Q2 2018 to $59.7 million in Q2 2019, representing 54.5% and 55.6% of total revenue, respectively[150]. - Adjusted EBITDA for the three months ended June 30, 2019, was $59.7 million, compared to $54.6 million for the same period in 2018[214]. - Adjusted EBITDA increased by $22.6 million, or 25.5%, from $88.3 million in 2018 to $110.9 million in 2019[180]. Acquisitions - The acquisition of Highway Toll Administration, LLC, was completed for an aggregate purchase price of $603.3 million, contributing $28.1 million in revenue for the six months ended June 30, 2019[135]. - The acquisition of Euro Parking Collection plc was completed for $62.9 million, contributing $3.2 million in revenue for the six months ended June 30, 2019[137]. Cash Flow and Debt - Cash flows from operating activities for the six months ended June 30, 2019, were $45.8 million, compared to a negative impact of $18.6 million from acquisition-related expenses in the same period of 2018[132]. - Cash provided by operating activities rose from $12.5 million in 2018 to $45.8 million in 2019, an increase of $33.2 million[185]. - Average debt balance decreased from $1.04 billion in the three months ended June 30, 2018, to $900.7 million in the same period in 2019[160]. - Total borrowing under the New First Lien Term Loan was $899 million at June 30, 2019, with an interest rate of 6.15%[218]. - Each 1% movement in interest rates will result in an approximately $9.0 million change in annual interest expense based on the New First Lien Term Loan balance[218]. - Interest expense decreased from $32.2 million in 2018 to $31.7 million in 2019, a reduction of $0.5 million[177]. Tax and Impairment - The effective tax rate changed from (4.7%) in 2018 to 32.6% in 2019, primarily due to higher pretax income across multiple jurisdictions[161]. - The effective tax rate increased from (20.3%) in 2018 to 32.3% in 2019, reflecting higher pretax income[178]. - Impairment of property and equipment included a $5.9 million charge due to the legislative ban on most red-light photo enforcement programs in Texas, impacting the Government Solutions segment[159]. - Impairment charge of $5.9 million recorded in 2019 due to legislative changes affecting the Government Solutions segment[176]. Segment Performance - The company has two operating segments: Commercial Services and Government Solutions, with performance based on revenues and income from operations[130]. - The Government Solutions segment generates service revenue through long-term contracts, with revenue recognized based on service performance or citation issuance[141]. - Government Solutions service revenue decreased by $2.3 million, or 6.2%, to $35.0 million in Q2 2019, primarily due to losses in red-light photo enforcement programs in Miami and Texas[153]. - The average initial term of contracts in the Government Solutions segment is between 3 to 5 years[202]. Other Financial Information - Cash used in investing activities significantly decreased from $(536.5) million in 2018 to $(14.2) million in 2019[189]. - The company had $74.9 million available for borrowing under the New Revolver as of June 30, 2019[195]. - The company incurred $1.1 million in transaction and other related expenses for the six months ended June 30, 2019, primarily related to a secondary offering[214]. - Other income, net increased to $3.3 million for the three months ended June 30, 2019, up from $2.8 million in the same period in 2018, driven by increased tolling activity[160]. - Significant judgments are required to identify contracts with customers and estimate transaction prices under the new revenue standard[206]. - The company has not engaged in any hedging activities during the six months ended June 30, 2019[219].